Portfolio manager comments — Q2 2025
In June, financial markets shifted their focus from US trade tariffs to the escalating geopolitical tensions between Israel and Iran. Equity markets reacted only modestly, suggesting that investors remained cautious and awaited greater clarity on the direction of the conflict. The ceasefire helped markets regain momentum, and by the end of June, the US stock market reached a new all-time high. The Swedish krona weakened slightly during the conflict, which had a positive impact on foreign currency investments. A global equity index* rose by 4% in June, while a Swedish equity index** ended the month roughly flat.
Markets were also supported by central bank decisions, with both the Riksbank and the ECB cutting their policy rates by 25 basis points. This led to a decline in short-term market rates, while long-term rates remained largely unchanged as markets await clearer signals on the outlook for Swedish economic growth. In the US, both short and long-term rates declined, aligning with Donald Trump’s stated goal of reducing the interest burden on the country’s large national debt. Falling interest rates are generally positive for companies, as they reduce financing costs.
Looking ahead, we see strong potential for economic growth to surprise on the upside, as many economists have significantly revised down their forecasts. A more positive economic outlook would likely support equity markets, and we have increased our allocation to risk assets, including a higher share of equities and greater exposure to US technology companies.
*Solactive ISS ESG Screened Global Markets Index NTR, SEK
**Solactive ISS ESG Screened Select Sweden Index CNTR